Greenspan: Revise Cpi

BUSINESS BRIEFING

March 5, 1997

Federal Reserve Chairman Alan Greenspan said Tuesday the 60 million Americans receiving Social Security and other government benefits are almost certainly being overpaid because inflation is overstated. He renewed his drive to fix the inflation gauge.

Testifying before the House Budget Committee, Greenspan suggested that Congress adopt a two-track approach to revise the consumer price index.

"There is almost a 100 percent probability that we are overcompensating the average Social Security recipient for increases in the cost of living," Greenspan said.

He said that because the CPI is also used to adjust individual income taxes, the upward bias also means "that we are causing the inflation-adjusted burden of the income-tax system to decline more rapidly than I presume Congress intends."

Supporting the conclusions of a five-member commission in December, Greenspan said there was a "very high probability" that the exaggeration in the CPI ranges between 0.5 percentage point and 1.5 percentage points per year.

New-home sales soar

Unseasonably warm weather in the Northeast and South helped push sales of new homes in January to nearly an 11-year high.

Americans purchased new single-family homes at a seasonally adjusted annual rate of 870,000, the highest since March 1986 and an 8.6 percent increase from December, the Commerce Department said.

In another report Tuesday, the index of leading economic indicators rose 0.3 percent in January. The index forecasts economic activity six to nine months ahead. The gain, reported in New York by the Conference Board, follows a 0.1 percent rise in December and a revised 0.1 percent increase in November.

3 hotel properties open

Extended Stay America said it opened three properties in February. The newest facilities are in Michigan, Ohio and Tennessee.

The company, headed by H. Wayne Huizenga, has opened 54 properties in 20 states. Extended Stay has 46 more properties under construction in 25 states. And it has options to purchase 108 more sites for development.

Publix earnings grow

Settling one of the country's largest gender-bias lawsuits put only a small dent in Publix Super Markets earnings last year.

The Lakeland-based grocery chain reported a 9.5 percent increase in profit to $265.2 million. That came on an 11.1 percent gain in sales to $10.4 billion.

Earnings included a $46.4 million charge from Publix's $81 million settlement of a gender-bias class action and separate Equal Employment Opportunity Commission charges of racial bias.

Publix admitted no wrongdoing in its genderand racial-bias settlements, announced in January.

Publix is a privately owned company, but it is required to file its financial results with the SEC because of its employee stock-ownership plan.

FPL shuts down reactor

Florida Power & Light said it took Turkey Point Unit 3's nuclear reactor off-line early Monday for a scheduled refueling. The reactor will be shut down for 40 days.

The utility said it will perform a number of routine maintenance work on equipment as well.

Correction

Because of a production error, the listings for mutual funds and the American Stock Exchange were incorrect in Tuesday's edition.